Car accidents are stressful for everyone involved. The victim needs money to pay mounting medical bills and replace lost wages, while the person responsible for the accident usually fears losing a lawsuit. For these reasons, both sides are tempted to settle a car accident dispute quickly, before they’ve had a chance to think about their best options. However, if a car crash injured you, discuss your case with a Houston car accident lawyer before agreeing to any settlement!
Avoid the Lowball Offer
Picture this: you were just in a rear-end car accident on Interstate 45 and are recovering at home, wondering how you’ll pay your rent or mortgage now that you’re laid up with broken bones and in considerable pain. Suddenly, the telephone rings and a kindly voice on the other end introduces himself as an insurance adjuster. He has great news! He wants to offer you a settlement—for $2,000. He can rush the papers over to you right away. Just sign and he’ll deposit your check straight into your account tomorrow.
Think this is a dream come true? Think again.
Chances are, this initial offer is much less than your injuries are worth—and the insurance adjuster knows it. They know that people want to get a quick check in their hands as their financial stresses mount, so they offer a low amount hoping that a car accident victim will accept it.
The catch? Once you agree to the low settlement, you’ll lose your ability to get fair compensation for your injuries. Before you get the check, you have to sign a waiver that you cannot pursue additional compensation from that particular accident. If you accept too little, there is not much you can do to fix the situation in the future.
There’s a very simple reason insurance adjusters make lowball offers. Before calling or visiting you, they already have a range in mind as to how much they can offer you. An insurance adjuster will never make an initial offer in the middle or high end of the range; instead, they’ll start low and give themselves room to go up. So while an insurance adjuster might really think your injuries are worth $30,000, they’ll never start with an offer close to that number.
While you might not be familiar with insurance company processes, settlement ranges, and how offers work, an experienced car accident lawyer is. This is the advocate you need on your side from the very start of the process to advise you when an offer is too low.
Estimating How Much Your Injuries Are Worth
Before you can decide whether a settlement offer is too low, you need some sense of how much your injuries are worth. Some injuries are easy to calculate, such as medical expenses, rehabilitation costs, lost wages, and repairs to your car. You can put a dollar amount on these economic damages. The insurance adjuster will add up these costs—and so should you. Never simply trust that the adjuster’s math is correct.
Under Texas law you might also be entitled to non-economic damages, though they are harder to calculate.
For example, car accident victims in Texas can receive compensation for:
- Pain and suffering
- Emotional distress
- Lost companionship
- Lost future earning capacity, if you can’t return to your current job or any job at all
These are intangible losses, so there is no inherent dollar amount to add up, such as with medical bills. Instead, your lawyer can use other evidence to determine what the value of your pain, suffering, and other non-economic losses should be.
Some insurance companies use a multiplier method to make an offer for non-economic damages. For example, they might take your economic damages (medical bills and lost wages) and multiply them by three to get your non-economic compensation. This method can grossly underestimate what you deserve for your pain and suffering, especially if you have a severe injury with lasting effects. Never rely on the insurance company to tell you what your damages are worth.
Every situation is different, and only an experienced car accident attorney can appropriately analyze the circumstances and determine how much you are likely to receive as compensation. Based on this analysis, your car accident attorney will come up with a settlement range that fairly compensates you for the disruption in your life.
Rejecting the First Offer
When you receive the insurer’s first offer, you should immediately reject it. After all, the insurance agent expects you to negotiate! Instead, come out swinging. Make a counteroffer by starting at the high end of your range. For example, you might have estimated that your injuries are worth $40,000 to $70,000. Don’t counter-offer with $40,000, because you’ll have nowhere to go. Also don’t counter with $55,000, since that doesn’t give you much room to maneuver, either. Instead, you’ll probably counter with close to $70,000, which is the upper end of what you consider a fair settlement.
Negotiating a car accident settlement is a lot like negotiating the purchase price of a car at the dealership. Each side goes back and forth, moving in increments until they reach a number to which they both can agree. At each stage of the negotiation, you’ll explain why you are entitled to the amount you are asking, by providing information about your economic and non-economic damages.
What if you can’t reach an agreement? Don’t worry! A settlement is entirely voluntary. If an automobile insurer decides to play hardball, you can always walk away from settlement negotiations and file paperwork in court to start up a lawsuit. You’re never forced to settle against your will, and your lawyer can’t accept a settlement offer without your permission. The choice is yours.
The Dangers of Settling Too Soon
A settlement has many advantages over going to trial. You can guarantee that you’ll receive some money and you can usually get your money faster. However, there are clear dangers of settling too soon, such as:
Your injuries haven’t healed. If you suffered a traumatic brain injury, then it might take longer to figure out how much money you’ll need for your future medical care. In this situation, you might need to wait a little while before settling until you have a better idea of how much money you’ll need.
Once you settle, you can’t sue. When you sign your settlement agreement, you also are signing away your right to sue for the injuries you suffered in the accident. After all, an insurer has no incentive to settle with you if you can turn around and still sue them in the future. Sometimes, it might be better to sue in court than settle your dispute—if, for example, the other driver’s insurance policy limit is less than your overall damages.
Settlement Negotiations Continue after You File a Lawsuit
Many people do not want to reject the insurance company’s offer and file an injury lawsuit because they are nervous about the idea of going to court. However, just because you start litigation does not mean your case will end up at trial in front of a jury. In fact, most car accident lawsuits never go to trial.
Part of the litigation process involves ongoing settlement negotiations between your attorney, the defendant (the person responsible for the crash), and the defendant’s insurance company. These negotiations can continue throughout the entire case – up to the moment the jury makes a decision.
But how are these settlement negotiations different from negotiating directly with the insurance company during your initial claim? Here are the reasons:
First, litigation has different steps. One of these is discovery, which is the exchanging of evidence between the parties. The lawyer for the defendant and insurance company will ask your lawyer for all the evidence you have to prove your claim. Likewise, your lawyer will ask for all the evidence the insurance company plans to use to defend against the claim.
Having all the relevant evidence on the table can help negotiations because each side sees what the other side is working with. If you have strong evidence to support your case, the insurance company might realize that you are likely to win. This can make them more likely to resolve the matter without proceeding any further through the litigation process.
Discovery can be a powerful tool to demonstrate that a jury will probably rule in your favor, which can convince the insurance company to offer an amount you truly deserve.
Once you file your lawsuit, the possibility of going to trial becomes very real. If you cannot reach an agreement out of court, the court will schedule your case for the trial docket. Both sides will need to put in the time and effort to prepare their cases, which can be an extensive process.
Settlement saves everyone resources for trial preparation and going to court, so this can be an incentive for an insurance company to offer a favorable settlement agreement when it refused to do so previously. You want an experienced litigator handling your case, so the insurer knows you are serious about taking the case to trial if you have to.
Settling on Your Own Terms
When a case goes before the jury without settling, the jury will listen to all the evidence and arguments according to trial procedures. Then, this group of people with little to no knowledge of the legal system will have the fate of the parties in their hands. A jury can decide completely in your favor and award more than you expect for pain and suffering, punitive damages, and more.
On the other hand, the jury can decide that the defendant was not liable, rule against you, and you get nothing. There is no telling what a jury will decide in many cases until they read the verdict, and there is no going back.
It is often in the best interest of all parties to settle outside the courtroom. When you negotiate a settlement agreement, you know exactly what you are agreeing to, and the insurance company knows exactly what they will have to pay you. This can be highly preferable to the uncertainty of trial.
Take the following scenario:
- A car accident attorney requests at least $350,000 for their client’s damages in settlement negotiations.
- The insurance company refuses to agree to more than $100,000, which is much less than the injury victim deserves.
- They cannot reach an agreement, so the case proceeds to trial.
- The jury finds that the insurance company owes the plaintiff $750,000 for their losses.
Because the insurance company would not agree to a reasonable settlement, it ends up paying much more in the end.
Insurance companies and their attorneys go to court all the time. They know the drill and they know the risks of taking a case to trial.
Often, an insurance company will settle during litigation unless it really believes:
- That the defendant was not the liable party
- That the plaintiff’s injuries are much less serious than claimed
- That the settlement demands of the plaintiff are highly unreasonable, and the plaintiff refuses to budge in negotiations
Even with all this in mind, when you file a lawsuit, there is no guarantee that the case will settle. It is important to have an attorney who will not push you to accept a settlement that is too low simply to avoid going to trial and end the process. Instead, you want an advocate who will fight for the compensation you deserve all the way to the end if necessary.
Speak With a Houston Car Accident Lawyer Today
Settlement negotiation is an art form, and an experienced car accident attorney knows how to reject an offer and when to finally accept one—so speak to a Houston car accident lawyer as soon as possible. At Stewart J. Guss, Injury Accident Lawyers, we’ve helped countless car accident victims get the compensation they deserve for car accidents that were no fault of their own.
For your free initial consultation with our team, call today at 800-898-4877 or send us an email through our online contact form. You’ll pay us nothing up front, and nothing at all unless we win your case.